Target lays off 600 in Twin Cities

Even Target isn't immune from the economic woes gripping the nation. The Minneapolis-based retail giant laid off 600 employees Tuesday in the Twin Cities, adding to the list of tens of thousands of job losses at companies across the country.

Target said it also will not fill 400 open positions, making the cuts amount to about 9 percent of Target's 11,000 headquarters workers, the bulk of whom work at its Nicollet Avenue office in downtown Minneapolis. It adds up to the largest job-slashing in company history.

In addition to corporate cuts, Target will close a distribution center in Little Rock, Ark., this year, forcing another 500 people out of work.

Laid-off employees learned their fate around 8:45 a.m., while their colleagues heard the details in departmental meetings that started at 9 a.m. Some workers said vice presidents cried as they delivered the news, while other meetings were said to be more stoic, with managers reading from a prepared statement.

"People were just numb. It was such a shock," said one downtown Minneapolis worker who didn't want to be identified. "We've had so few layoffs over the years that even with all of the news [about Target's sales and the economy], we didn't think it'd happen here."

Retailers nationwide are seeing record-setting sales declines, as mass numbers of worried consumers cut back on buying everything but the basics. Retailers just suffered through the worst holiday shopping season in nearly 40 years. In December, Target's sales at stores open at least a year declined 4.1 percent. The nation's second-largest discount retail chain, behind Wal-Mart, also has seen rising levels of defaults on its $9.3 billion credit-card portfolio.

"We are clearly operating in an unprecedented economic environment that requires us to make some extremely difficult decisions to ensure Target remains competitive over the long term," Gregg Steinhafel, Target's president and CEO, said in a prepared statement.

The layoffs are the latest in a brutal round of job-cutting by large corporations. On Monday, about 55,000 new layoffs were announced at a variety of companies, including Home Depot, telecom giant Sprint Nextel, construction equipment manufacturer Caterpillar, semiconductor maker Texas Instruments and pharmaceutical company Pfizer. Already, 170,000 jobs have been lost nationwide in January.

A rare event for Target

Layoffs at Target have been rare since the company opened its first store in 1962 in Roseville. In 1994, about 80 people were laid off when the retailer pulled the plug on some of its catalogs. In 1987, Target eliminated 219 jobs, mostly in management. And in 1972, a reorganization of in-store management led to 80 layoffs.

Target has fared worse in the economic downturn than rival Wal-Mart, in part because more of its revenue comes from discretionary items such as furniture, home decorations, jewelry and clothing.

Target said it has taken other steps to reduce costs and deal with the country's economic slide. It has suspended salary increases for senior management and stopped its $10 billion stock buy-back program, which it was about half-way through. It also has tightened its credit card operations as stressed consumers have a harder time paying their bills, and it will open fewer stores this year.

No store employees are affected by today's layoff announcement. The company has about 350,000 workers worldwide, and has 1,682 stores in 48 states.

Longtime Target shopper Joy Gretsch, of North Oaks, said she had hoped Target would be able to skirt some of the bigger problems in the economy because it sells so many consumer staples.

"It's kind of scary," said Gretsch, who was buying toilet paper and other essentials Tuesday. "I love Target. I need it to be here and be strong. But maybe they need to make some cuts at corporate, if they're top heavy. Maybe that'll be good for them in the long run to be smaller."

Target remains the largest employer by far in downtown Minneapolis, but the job losses will strike a blow to nearby businesses, said Sam Grabarski, president and CEO of the Minneapolis Downtown Council.

Half of retail shopping downtown is done by people who also work downtown, Grabarski said. The Downtown Council will release exact numbers of job losses at its annual meeting next week, but Grabarski said many of the downtown core's top 20 employers have had layoffs of "200, 300, 400 workers."

"The flip side is that 10,000 Target employees remain, and they still remain a truly important economic force for downtown Minneapolis," Grabarski said. "But there is a ripple effect when downtown's largest employer has layoffs. It'll affect those companies downtown as well as those outside of downtown."

Target didn't publicly release the final tally of the job losses until 4 p.m., but laid-off employees packed their belongings in cardboard boxes and left the offices by midday, according to several workers. Laid-off employees were picked "based on business need using company wide, objective criteria," according to an internal memo given to managers to prepare for employee questions. Some portions of the company were hit harder by layoffs than others, but names of specific workers affected were not released, according to the memo.

"This was a very emotional day for a lot of people," said one worker as he climbed onto a bus at the end of the day. "It was a tough, tough day."

Laid-off workers will receive full pay and benefits through April 1 and will receive a severance package based on years of service. Target will also pay a year of health care benefits. Workers at the Little Rock center will be offered jobs at other distribution centers or comparable severance.

Andrew Newman, a University of Minnesota reporter on assignment with the Star Tribune, contributed to this report. cserres@startribune.com • 612-673-4308 jcrosby@startribune.com• 612-673-7335